Alphabet’s Cleantech ‘Moonshots’ Attract Big-Name Investors

Two cleantech startups from Alphabet’s “moonshot factory” improved their odds of commercialization this week.

Makani, which makes a kite-based wind power generation device, secured a partnership with Shell’s wind development arm to test the technology offshore. The deal makes Shell a minority shareholder in the startup, although further details of the terms were not disclosed.

Now, Makani will graduate out of X’s Moonshot Factory and live as an independent entity within the Alphabet corporate structure.

Earlier this week, home geothermal heating company Dandelion Energy raised a $16 million Series A led by Google Ventures (now called GV) and Comcast Ventures.

Back in December, X (formerly Google X) spun out another far-out energy startup called Malta, which converts electricity into thermal energy and back again. That company raised $26 million from Breakthrough Energy Ventures, Concord New Energy and Alfa Laval.

This makes for a solid record of successes for X. All three active projects that dealt primarily with energy have graduated from the lab.

Another energy concept, Project Foghorn, would have synthesized carbon-neutral fuel from seawater, but the team discontinued the effort due to the challenges of achieving cost-competitiveness with gasoline.

Cleantech investment rebound

The preliminary achievements of the three projects are all the more notable because groundbreaking energy hardware has been anathema to venture investment for years, since the big busts of the first cleantech investment boom. Investors lost big with expensive bets on thin-film solar and biofuels, technologies which largely failed to overcome their mainstream alternatives.

Investor sentiments are changing, however. New strategic funds have emerged to offer a more direct line from energy startups to well-capitalized potential customers or buyers. Other funds have emerged targeting early-stage cleantech investment, including hardware.

Overall venture and private equity investment in cleantech for 2018 was the highest since 2010, according to Bloomberg New Energy Finance. That total grew 127 percent over 2017.

“There’s both a wave of new innovation in this space that warrants investment, and capital largely available now for good ideas,” said Shayle Kann, senior VP of research and strategy at Energy Impact Partners, on a recent episode of The Interchange. “Rarely, I think, do we see at this point really good ideas with great teams that just can’t find capital to grow.”

Malta found capital despite the uninspiring track record of technological alternatives to dominant lithium-ion batteries for energy storage.

Dandelion’s raise brings the company’s total funding to $23 million to make geothermal an attractive alternative to gas or oil heating in homes. It faces strong incumbents in a market where high costs have historically limited the penetration of geothermal.

“Dandelion Energy expects to use this round of funding to accelerate growth, invest in research and development, and expand its operations across New York state — opening new warehouses and growing its team,” the company said in the announcement.

Homebuilder Lennar joined the round, raising the possibility that it could include Dandelion systems in new-build homes.

Makani to benefit from Shell’s expertise

Of the three X cleantech graduates, Makani’s technology is the furthest from anything on the market. It’s developing a wind generator without the tower, by putting turbines on a drone kite that flies in circles while tethered to the ground. It has been testing a 600-kilowatt prototype in Hawaii.

If it reaches market, this design could drastically lower the cost of wind power and speed up deployment times, by eliminating heavy construction from wind farm development. It also opens up new territory that may be hard to reach with conventional designs.

Shell wants to help commercialize the kites for offshore deployment, where they could anchor to buoys in deep water with much less effort than it takes to secure a traditional floating turbine.

“We’ll be drawing on Shell’s extensive engineering and operational expertise with floating structures to make this transition,” Makani CEO Fort Felker wrote in a blog post Wednesday.

The partners plan to test an offshore Makani system at the Marine Energy Test Centre in Norway later this year, and Felker added that he is working on other partnerships to assist commercialization.

Shell has invested heavily in the cleantech space over the last year, most recently acquiring Greenlots to anchor electric mobility operations in North America.

The oil and gas supermajor separately invested in a different floating wind technology Wednesday. It acquired a 66 percent stake in the €18 million TetraSpar demonstration project, which will mount a 3.6-megawatt turbine 10 kilometers from the coast of Norway in waters 200 meters deep.

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